Page 97 - Foundations of Marketing

64 Part 1 | Strategic Marketing and Its Environment

Consumer Credit Card Security
Credit card theft has created the
need for consumer vigilance
and regulatory agencies’ assis-
tance in preventing fraud.

© iStockphoto.com/cmcderm1

In addition, laws have also been created to prevent businesses from gaining an unfair
advantage through bribery. The U.S. Foreign Corrupt Practices Act (FCPA) prohibits American
companies from making illicit payments to foreign officials in order to obtain or keep busi-
ness. Siemens AG paid $ 1.6 billion to the United States and Germany to settle allegations that
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it had bribed government officials in different countries to win contracts. The FCPA does
allow for small facilitation (“grease”) payments to expedite routine government transactions.
However, the passage of the U.K. Bribery Act did not initially allow for facilitation payments,
although the U.K. government has decided to review this prohibition, because it is often nec-
essary in developing countries to pay low-level government officials small gratuities for them
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to carry out their duties. The U.K. Bribery Act is more encompassing than the FCPA and has
significant implications for global business. Under this law companies can be found guilty of
bribery even if the bribery did not take place within the U.K., and company officials without
explicit knowledge about the misconduct can still be held accountable. The law applies to any
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business with operations in the U.K. It also can hold companies liable if its joint-venture
partners or subsidiaries are found guilty of bribery. However, the U.K. Bribery Law does allow
for leniency if the company has an effective compliance program and undergoes periodic
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ethical assessments. In response to the law, companies have begun to strengthen their com-
pliance programs related to bribery. For instance, Kimberly-Clark now requires some of its
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business partners to consent to audits and keep thorough documentation of their payments.
State consumer protection laws offer an opportunity for state attorneys general to deal
with marketing issues related to fraud and deception. Most states have consumer protection
laws that are very general in nature and provide enforcement when new schemes evolve that
injure consumers. For example, the New York Consumer Protection Board is very proactive in
monitoring consumer protection and providing consumer education. More recently, the New
York Consumer Protection Board has taken measures to protect consumers from scams or
data breaches. It provided information to warn consumers against falling for Hurricane Sandy
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scams after the disaster struck.
Self-Regulation

In an attempt to be good corporate citizens and prevent government intervention, some busi-
nesses try to regulate themselves. Several trade associations have also developed self-regulatory

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